Stay Alive Until 2025… Or is it now 2026? with Mark Fleming of First American

[David] Listeners. We're in for a real treat today. Because we get to talk to Mark Fleming. A celebrated economist. The fed made its move here recently, and we're going to get Mark's take on it. And what we can anticipate as we head into the new year our rates going up. were they going? Hope we'd like to hear some good news. might be going moving layer lower, but we're gonna have Mark is the Senior Vice President for Decision Science and a Chief Economist for First American Financial Corp, a leading provider of title insurance. You all know who they are. Mark, good to have you back on the podcast. It's been a while. [Mark] David, great to be here. It has been a little while, so good to be on, especially at Christmas. [David] Yeah. Especially at Christmas. And what a perfect timing to have you on Mark, because the fed reserve did their thing earlier this week, much anticipated what would be happening. And I can't wait to get into that. But for those that don't know you, let's get a brief kind of a little bit of your journey to where you're at today. Tell us our listeners a little bit about yourself and how you got to where you're at. [Mark] I started down this journey in graduate school. I was studying economics at the University of Maryland outside DC, where I live now, and working on land use change and property valuation models. sort of what we know as AVMs, early versions of those many years ago. I'm not going to tell our listeners how long ago that was. And that led me to a path of working at Fannie Mae. And so, I learned mortgage finance and property valuation and AVM types of work there. And then on to CoreLogic doing much of the same things, but they're fraud detection and then finally, the last stop here was First American and Title Insurance. And along the way, model development, analytics, that's the decision scientist part, as well as the reason why I'm here today really, which is chief economist roles, talking about housing markets, mortgage rates, trying to read the tea leaves with ever so murky crystal balls, if you will. [David] That's so true. Tell us a little bit about decision science that has an AI sound to it. If you could give us a little bit insights into what that is and what you're doing there with it. [Mark] Indeed. Decision Sciences, I mean, the label sort of says it all. It's about the development of machine learning and AI type models for the simplification, the automation, the risk analysis of the things we do at First Ameican. So a lot of title automation related work, risk modeling work, that's sort of for my Fannie Mae mortgage days. And we thought the name Decision Sciences was good because all these monikers change. I laugh because in many ways AI has been around for 40 or 50 years. It used to be called statistics, right? And I've been a data scientist for longer than the term data scientist existed. That's called a statistician. But the tools are so much better. Over the last 25 years of doing this work, it's getting just easier and better with all the cloud computing and everything else. So it's really fun. [David] Yeah, You also have two other designations that I would add behind your name is RGG and RSG really great guy and a really smart guy. So I put those two other designations. So I'm really excited to have you here. And I wanted to start off by getting your takes on the new Trump administration, especially some of his cabinet picks for finance to begin with. [Mark] There we go. [David] What's your thoughts treasury? All of them. [Mark] It will depend, right? Who's in those chairs is obviously important. The last administration, people didn't necessarily last very long in many of those chairs. those might be revolving doors. I think the broader piece, and that's gonna get into our conversation about the Fed and mortgage rates is sort of more generally what kinds of policies will actually come to bear. There's a lot of talk about what possibly might happen, but more importantly, what actually happens and its influence obviously on inflation and therefore on the decisions that the Fed is making. And that's honestly why I think in part the Fed changed its stance for 2025 in its meeting earlier last week. [David] Yeah, explain the change in stance. If you could give us a little background for our listeners on that, please. [Mark] Sure. So in September, they released their summary of economic projections along with a rate cut of 25 basis points. And that summary of economic projections is really their forecasts for where they think the interest rate that they're cutting will go, as well as GDP and inflation, all these different things. And they were pretty bullish. I think in September, we weren't surprised by the rate cut in September, but we were surprised that they were suggesting a full percentage point more in 2025. Fast forward to just last week and the Fed's last meeting of the year. Again, another summary of economic projections comes out and no surprise on the 25 basis point cut. That was something like a 99% odds in the mercantile markets about that. So that wasn't the surprise, but the surprise really was their revision to their forecast for 2025 to only an additional half a percent. So cutting the pace of monetary easing fully in half in 2025 in recognition of this increased uncertainty due to an administration change, but also importantly due to things like a continued slightly weakening labor market and a slow down in the decrease in inflation going into next year. [David] Yeah. One of the things that Trump has been saying for some time is he wants to get rid of the federal reserve entirely. I mean, I know that he has not the power in and of himself to do that. would take literally an act of Congress to do that. is this rhetoric? what's your thoughts and take on his position with the federal reserve? He says a lot of things for effect and he gets some results from that. What's your take on this? [Mark] I think that's the main point. What one says and what one does aren't necessarily the same thing. And I'm going to worry about what one tries to do, not exactly what one says. think Jerome's answer when asked in a meeting, if Trump asks you to resign, will you? His answer was one word and it was no. the follow-up question was, well, if he tries to make you... [David] Well, yeah, exactly. [Mark] Do you think it's possible that he can make you? And the answer was also one word and it was no. however that were to happen, I think it's also interesting to understand that a little bit of a history lesson about the Fed. The Fed is actually a relatively modern institution within the US government. It was formed in the 1920s and independence as we think of it above the Federal Reserve. [David] That's right. [Mark] Is actually an even more modern concept really coming out of the 60s and 70s, this idea that the Fed was supposed to be independent from an administration. And there's no law that says they have to be independent. It's of customary and practice across many different administrations over recent history, but it's not a legal concept that necessarily binds that concept of independence. [David] Yeah, great point. And listeners, if you have not read the book, The Creature from Jekyll Island, it really gets into the creation of the Fed, what was behind it. It's a thick read, it's a great read. I've got it right up here Griffin wrote it. It's a great book, I recommend it. I'm just was looking at it up here on my shelf. But I think there's a lot of discussion about what it is, we need to proceed on the case of the Federal Reserve and Powell is gonna be continuing, so we pay attention to what they're saying. So give us what your forecast cast is or what you're anticipating in the new year for us. What do we have to look forward to? [Mark] Yeah, I kind of think in the 20 rough years that I've been doing this sort of housing real estate professional economist thing, it's only been in the last four or five that I've even paid attention to the Fed and monetary policy, really, because it's been pretty benign or even stimulative for most of my professional career, certainly in the last 10 years with the very, very low Fed funds rates and consequently very, very low mortgage rates. So it's been a fascinating time to actually have to [David] That's right. It's true. [Mark] Understand and study inflation amidst a rising inflation environment and its consequences on the market. I think looking ahead to 2025, we're in a very interesting situation where certainly now after last week's meeting, it doesn't seem like mortgage rates are really going to go much of anywhere from where they are already. We're talking a mid six and a half percent mortgage rate. Ten-year treasury might go up a little bit, down a little bit, but we're not going to significantly move mortgage rates from where they are for most of 2025, I expect. We might get lucky and get a little closer to six by the end of the year. [David] I heard some people talking that we could see the high fives possibly, what are the factors in your mind, Mark, that are gonna push interest rates lower? we've been looking at global geopolitical events globally, and typically that's resulted in a flight equality, quality, which has driven rates down, but that we've seemed broken from that tendency here recently, we've seen a lot of geopolitical instability in different parts of the world, and yet we haven't seen the flight to quality that we normally do. What is it going to take if we were to see rates drop in your mind? What would it take? are we data dependent? Are we not data? And what are the factors? [Mark] Well, one thing that I think that could reduce rates that I don't really want to happen is the recession. Right? Yeah. I don't think there will be one, but that would be one thing that would help get rates certainly below six. The downside to that is you get all of the negatives of a recession. So I would rather have a stable rate environment. We actually saw existing home sales also came out last week. [David] Which is where I wanted to go, yeah. Let's hope that's where you're go. [Mark] And they went up finally back above the magic four, right? That's good news. I think it indicates to us that the consumer, the home buyer or the home supplier, because in many cases that is the same individual selling their home and buying a home. They're looking at all this and saying, rates aren't going anywhere. I'm not gonna time anything. Let's move on. Life's going on. I wanna buy that bigger house. I have more kids. I need to move from my job. [David] Yeah, and it's really good news. [Mark] I think those are the sorts of things that if you stay in a stable rate environment, that's almost as psychologically beneficial to our home buyers and sellers as a declining rate environment. [David] We see some of the trends that are already happening as result of the new administration being nominated, winning the election, and pretty resoundly, there seems to be an overall resurgence of optimism and hope, which doesn't sound a recessionary in any way, shape, or form. what do you think? there of a recession based on what you're seeing right now. Are the factors lining up where there is in fact a solid chance of that or are you thinking not so much? [Mark] Well, you do know that economists have been forecasting a recession in the next 12 months for the last four years, right? So to some extent, we're not really good at this. That said, I don't see anything that would suggest a recession is coming. there's not a lot of weakness in the labor market. In fact, if anything, it's a little bit too strong still ever so slightly. GDP growth is still strong. The only weak [David] Yes, exactly right. We got a recession, [Mark] Area is in consumer spending. We do see some distress beginning to pick back up in credit card delinquencies, auto loan delinquencies. But that's really one of the few places where we see any distress in the economy. And therefore, I think odds on going into 2025, certainly as the Fed is continuing to even modestly reduce rates that balance and that soft landing that they were so ever hopeful to achieve, I think is quite achievable. [David] It is quite achievable. I actually agree with you. Which is not surprising. I'm thinking of your comment about predicting a recession within the last four years. mean, within 12 months it has been predicted over four years. Reminds me of when Doug Duncan, you and I were sitting at a table. It was one of Tony Moss's events, AmeriCatalysts, and you and I were sitting there at the table and Doug comes over Doug Duncan of the Fannie Mae at the time, now retired. Sat down and said, you mind if I join you? said, great. Another economist. says, yeah, there's two economists. That's means we're going to have at least three or four different opinions. so Doug's always got so many great sayings. am really looking forward to what I think housing is going to be researching, but we're still stuck with this stubborn supply issue. What is it going to take in your mind? Is it just an attitude? It's time to move forward and start doing some [Mark] Exactly. Yeah. [David] Moving up or doing whatever we're going to do, move up, do move down. Is that really what it's going to take? [Mark] I think there are two issues with sort of the housing market. One is buy our own doing in recent history with rates and the other one is much longer run. So we'll start with the other one first. Yeah, that is we've not been building enough housing. I'm not talking about homes for people to buy. I'm talking about rental units, any kind of shelter in the form of owned or rental. We've not been building enough of it for at least a decade. [David] Yeah, let's start with the other one. [Mark] Now there's wide variation in the estimates, but it's all in the terms of millions of housing units short relative to household formation. And keep in mind, every year we form roughly a million or more households. Essentially that's each household wants shelter over its head. And so even to just keep up with new demand, you have to build a little over a million new housing units. And for much of the last decade, we haven't been doing that. And we're only barely doing just enough to keep up let alone whittle away the shortage that has built up. not rocket scientist economics here, a good in short supply relative to demand and the price goes up. [David] Yep. See much relief on that, which means we have to have growth in incomes to be able to afford the homes that we were going to have. yeah. [Mark] To be able to afford that shortage, but it doesn't go away because every year a million more new households show up wanting that housing. Like how do you catch up on something? This is not an optional good, right? Housing is not an optional good. So we have to make enough of it. [David] No, it's no, but this is an area with you at Fannie Mae, your previous background, you've studied housing supply in such a big way, pricing trends. You've looked at this a great deal. what are the factors we need to have short of just buy more? mean, it's people bringing product to market that they owned existing housing stock starting to have a much greater turn rate. Now, in theory, you have new buyers coming in. You're not really seeing existing homeowners going to rental and going to become renters. That's not a trend we're gonna see in there. So there's a probability of my generation, the baby boomer generation downsizing, possibly, at some point in time. So it's the creation of those homes. What do you see for home building, the trends that Mark that are potential? Do you guys study that at First American? [Mark] Yeah, I think it's one of the key issues in the housing market and the success of the housing market moving forward. So first of all, the supply problem of building enough shelter, that's a whole another podcast episode. We have to talk about NIMBYism and YIMBYism and all that kind of stuff. Let's assume it's going to be really difficult to do that, that we will be under supplied. Then we talk to the housing market. Okay. So who owns all of the supply? Well, something like 85 plus percent. [David] Yeah. I'd love to have you on for that. Yeah. [Mark] If Baby boomers are homeowners, the homeownership rate for baby boomers. So they own a large chunk of the housing stock. And most of them right now and the generation X'ers behind them have mortgages well below 6% 6%. So first and foremost, in the short run, the challenge is I'm not listing my home for sale because there's a financial penalty, the rate lock in effect. but that will fade over time. We've already begun to see, know, life matters, exactly. [David] Yeah, highest percentage. Now life events have a tendency to change that. [Mark] In the longer run, you're absolutely right. Those baby boomers with an 85 % homeownership rate will, how do I say this politely, age out of homeownership. Hopefully into something transitional before the real end of things. [David] Yeah, before they buy that small plot on the ground. [Mark] Exactly. You say it, not me. Yeah. But what we're finding is, and that happens to every generation, right? The silent generation has largely aged out of their home ownership years. The problem is baby boomers are healthier, wealthier and wiser than any generation before them. And that allows them to stay in their own homes for longer. It is just beginning and with all demographic things, it moves slowly. But the next 10 to 12 years, we do expect a large amount of housing to be sort of made available in the existing market as baby boomers age out. But keep in mind, we still have that underpinning problem of if we're not building enough to keep up with the new demand, even though they're aging out, shortage. [David] Yeah, we're still gonna be living with this shortage for a long time. What do you see as far as building trends? I have a friend of mine, Kevin Cottrell, which I'll be meeting with over the holidays. He lives in Florida. They have invested in a brick, is the name of a new building company, and they're manufacturing. It's not manufactured housing in the traditional sense of what we think is manufactured, but it's manufacturing a really well-built home. In this case, it's a hurricane rated, pretty high rated hurricane strength in this home. So it's not a typical manufacturer, we used to call them tornado magnets up in Oklahoma. That's not that type of thing. This well-built steel construction, and they're oftentimes modulized. That's a trend that I'm seeing. Well, at least one company's looking at a new way to lower cost, the cost per square foot from a construction standpoint lower, but yet having a good quality. are you seeing trends like this? What are you seeing out there? [Mark] Yeah. So the economist in me, wants to say, you're talking about productivity and how do we change productivity of construction, right? I talked to one builder a few years ago and he said, you know, the greatest invention in home building in the last 40 years was the pneumatic nail gun. He goes, but the problem is I still need someone to point and shoot it. Productivity growth in home construction is negligible over the last 20 or 25 years, as opposed to many other industries which have experienced significant productivity improving enhancements. If you think about it, we still generally build homes the same way we did 40, 50 years ago. [David] Yep. The Pneumatic gun sped it up a bit. But the other thing is the labor issue, especially when you look at immigration, if we truly deport some of the illegals that are out here that are on the roofs, putting up roofing and putting on a sheeting around these homes right now, we could have another supply issue and that's availability of labors to build the houses. [Mark] The construction industry is sort of being hit from all sides, right? I agree with your friends sort of trying to find ways to modulily reduce the cost and increase the productivity of construction, and that will help. That's only one of the ways in which it will help. It will make housing more affordable, but you still have to be able to buy the land. Someone has to let you buy the land. Literally, it seems in many parts of this country, it's very difficult to get your hands on the places to build in the first place or to build at the density that would be beneficial. You've got labor cost issues, shortages of labor. You can pay more, but if you even exacerbate the labor shortage, as you suggest might happen next year, then you would have to pay more in terms of wages for the people there, or you won't be able to build as much. You're trying to the builder or the construction worker away from your colleague. It's a zero sum game for the industry, right? There's only so much to go around. [David] Right. The headwinds for this industry, for the building industry are pretty significant when you look at what [Mark] And even input costs have gone up. Lumber's more expensive. By the way, we do get a lot of our framing lumber from Canada. there are already challenges to builders being able to build affordably and looking ahead, it's not that they're necessarily going to get better. In fact, there's risks that it might get worse. [David] Interesting. That's true. If we do the tariff, let me talk about that. Yeah. it might get worse, which goes back. there's no real silver bullet for the housing supply issue right at this point, other than what might spurred on is the lower rates. And what you already said, pretty likely we're gonna be in the sixes, possibly with, you know, bullish economy, we could define ourselves in the low sevens in 2025. And that's gonna be creating quite an interesting environment where we're at. [Mark] The important thing with rates in this environment, let's say rates do go down to five and a half or heaven forbid five, let's say, given that we haven't fixed the housing supply problem, what ends up happening? It's still a good and short supply and by lowering the mortgage rate, you've increased the buying power of buyers for something that's in short supply. We've already seen this happen before. Everybody chases and fights in bidding wars and the price of the asset goes up. And so you immediately remove the benefit of lower rates by jacking up prices. Now, a large chunk of the US population does benefit from that. The 65% of households who are homeowners have benefited, you and I included, right, with significant gains in equity. The challenge, I think, really becomes that first-time homebuyer who's usually a renter, and they're the ones who get hurt. [David] A good friend of mine and a business partner, I'm privileged to be now in a business partner relationship is Allan Weiss. He was the co-founder of Case Schiller Weiss Analytics. Case Schiller is now owned by your old employer CoreLogic. And it's a gold standard for the housing prices. Allan continued down that journey and he has now collected data since 2000 literally per home levels. mean, literally at the house level data on 90 plus percent of the real estate market in the United States. What we're seeing, Allan and I are doing a TV program together, Your Home Coast to Coast. We'll put a link into it for those of you interested in seeing it. We are already looking at some recent trends. We did an analysis, one of our previous recent programs we did was here in Austin, Texas. There is a part, only a part of the Austin market that is still going up in value the entire North and all the way around the Eastern side, all the way down to the Southern side, almost like a reverse C around this one part of the homes is all going down. Many parts of the nation prices are now going down. How do you explain this? And is this a temporary aberration? because of the demand, are you going to now an economy that could be getting stronger? Is it possible that we're going to see home prices continue going up? They right now, many parts of the country, they're actually going down. [Mark] Yeah, so I'll take your point with a grain of salt because I use Austin as my classic example of, yeah, sure, yeah, we see that house prices have gone down roughly by 8 or 9 % now from the peak in Austin from our, according to our data, and there's lots of different indices out there. So the actual numbers are often different, but qualitatively, we also find the same thing. So yes, prices are going down right now in Austin. [David] Yes. From the page, yes. [Mark] But between the beginning of the pandemic, when you start in February of 2020, right before the pandemic started to the peak of Austin prices, Austin prices increased by almost 70% in those three and half years. Right, up 70, down eight. That's like saying, you know, I bought my Google stock for a hundred. now, it went up to 500 and now it's worth 450. Like cry me a river, right? Right. [David] So a pullback. I just lost $50 on my Google stock. mean, I'm so frustrated. No, you didn't. You've got massive growth. Yeah. I just went out and bought some XRP. I wish I would have bought it yesterday, but I'm looking at the growth of that from 52 cents on up to two, almost three bucks. Now it's back down into a range. look at this. What's going on overall the house prices. want to focus your thoughts now to those that are listening and says, how should I plan my business? You've already told me, Mark, I'm thinking my listeners who is a lot of originators in this audience that we have, are saying, you've already told me, probably not gonna see fives. Most likely we're gonna stay pretty stable. What would you be saying should be their focus going into 2025? [Mark] Well, you certainly have to look to the first time home buyer, right? In a stable rate environment where most existing mortgage holders have mortgages well below the current level, you're not gonna get refinanced business, right? That's hard to come by. One exception to that would be home equity lending or HELOC lending. Because remember all those existing homeowners in Austin who made 70% in appreciation on their home and don't want to move because of their low rate and also don't want to give up that low rate on their primary mortgage, but they still do want to do a renovation in their home. So home equity and HELOC lending is a key there. And then again, because people are less inclined to move, there's less purchase activity. There will be more purchase activity than this year. We think overall existing home sales will moderately go up above 4 million and stay above 4 million compared to the 3.7 or 3.8. [David] That's right. There are the Hilux. [Mark] Early this year, so you'll get a little bit more purchase business among existing homeowners. But the real key is the first timer. There's probably a large amount of pent up demand amongst renters who want to become homeowners now. The question is, how can we find ways to make housing affordable for them? [David] Yes. [Mark] And I would suggest, because I'm talking to the mortgage lending community, let's not find ways like we did in the subprime boom with two 28s and three 27s. Yeah. Right. That didn't work out so well, but we have to find ways to sort of make it more affordable or help them with their affordability challenge. But it's the first time home buyer is the customer. [David] Yes. Do the crazy loan programs that we had back then. Is there room for programs where I'm thinking back of the FHA GPM mortgage, back of the old, old, old, days. I'm dating myself, I'm over 50 years in the mortgage industry. You look at the graduated payments that are out there, some of the options, you look at builders doing buy downs, buying down the rate and doing a 5171 buy down for a period of time. what are you anticipate seeing as far as innovation in product. [Mark] I think we don't necessarily need to innovate in some of the products that we have as much as make people aware of the benefits of those existing products. I think there are two obvious places. First is in the down payment. And what do mean by that? Well, people still think you need to put 20% down in order to buy a home. There have been low down payment, first time home buyer programs, 3% or 5% for decades. People don't know about them. So that's the first step. The second one is, and I'm gonna laugh because I fall prey to this one too, is why do you give someone, or why does someone get a 30 year fixed rate mortgage, particularly on the first home that they buy, when I'll bet you 95%, 99% likely odds that they will not live in that first home for the next 30 years. [David] That's right. That's really a great point. Great point, Mark. Yeah, very likely. Very likely. Name one person. Yeah. [Mark] Why pay the premium of a 30-year fixed rate mortgage rate when you could get a five, one hybrid arm or a seven, one hybrid arm with a slightly lower rate? Still fixed for five, still fixed for seven. That actually matches my, what we call tenure length much better than, but you know what? When I bought my first home, I got a 30-year fixed rate mortgage. [David] Yeah. Very good point. [Mark] Because we don't like the uncertainty. But if we could encourage the option of and explain, you still get it for a fixed period of time. Exactly. [David] Especially for first time home buyers. Especially for first time home buyers. They're usually buying a little more conservative. They're not getting out ahead of their skis too much. So they want to make sure that go home, they buy, they can keep and move up. That means they will be moving up most likely five, seven years. So why not take advantage of the lower rate of that? I think loan officers need to do it. The other point you're really bringing out is so important. How many first time home buyer programs are out there that are not well published or that you have not taken loan officer the time to study? That is such a good point. [Mark] Yeah, and there are a number of elements of sort of the consumer doesn't understand. I get it. This is confusing. You don't do it very often, right? We don't buy homes like we buy milk every week at the grocery store. So I think there's great educational opportunities for that first timer to bring them into the market. [David] Yes. Great point. I love talking to you. Every time I have you on the podcast, I go and I got to have you back. And I mean, I want to have you back at least six times this year on a new year, talking about these issues because you're very articulate on them. I want to go to Scott Turner, the new incoming HUD director, any data points you have on him got any sense of what we can anticipate if he gets confirmed as the new HUD secretary. [Mark] No idea, but more importantly, if you think about regulation of housing, it's not just HUD. In fact, it might even be more so the CFPB, the FHFA, the regulator of the GSEs and FHA, like there are so many regulatory institutions that have an influence on housing. So it's not just about HUD, it's about all of them, which can make things more challenging, honestly. But I think at the moment, organizations like FHFA, the regulator of the GSEs and the CFPB, they may exert a lot more influence in the next couple of years in the housing market through some of the planned initiatives there. [David] Which begs the question going back to home or before we started with this new administration coming in the last time there was some talk about privatizing Fannie and Freddie. I'm not for that personally. I like the system we have, yet there's a lot of potential for that to happen. Your thoughts. [Mark] Yeah, we've been around a long time. remember, do you remember the Corker-Warner bill? Do you remember? So they've been trying to privatize or bring the GSEs back out of conservatorship for since I think roughly 2012, I suspect. I agree, the last administration, FHFA under Mark Calabria, there was a big push to do that then, and likely there will be a big push again this go around. Maybe it'll happen this time. But I look at some of this and say, what is the most important thing day to day is sort of the plumbing of the TBA markets and sort of the execution of the ability to know when you originate a loan, you'll be able to sell it to the GSE and you know from the TBA market what rate you're gonna get and all of that efficiency. I will simply point out that when the GSEs were taken into conservatorship, that plumbing, worked seamlessly through the transition. Now there might've been changes in what an MBS investor thinks the rate that needs to be charged is. Those will move around based upon expectations and things like that. But the literal plumbing that goes day to day, it still works the day before, it'll work the day after. but there will be repricing, right? I think everybody recognizes when you change things, that's uncertainty and investors don't like uncertainty. [David] Yeah, very good point. [Mark] And they're going to require a premium at least temporarily for uncertainty. [David] Yeah, really good point. When you bring up regulation, you touched on that just a bit. When you look at going back to the builders and building new homes, some of the headwinds has been, in some parts of the country, well generally speaking, I think it's a 30% of the cost to build a home has regulatory connection to it. In San Diego, it's as much as 50%, if I remember hearing the President of the Home Builders Association talk about this. I do hope this administration can do something about reducing that cost element in building a new home. That could help while we're facing other increasing costs, if we could get the cost regulation down. Thoughts on that? [Mark] Yeah, you make a great point. mean, and regulatory burden, not just for the housing industry, but has gone up, has been going up for decades. It's not sort of a one administration thing. It's been across many administrations. And you're right. In theory, anti-regulatory stances should be beneficial in reducing those regulatory costs. But remember a lot of the regulatory burden when it comes to housing isn't at the federal level. [David] Yes and the influence, right, you know, would be by an administration would be on the federal government. There could be benefits to housing there for sure, but the local government is where the regulation is. Yeah. [David] That's it. Right. Yeah. It's really, it's really local. It's yeah, it's state and local. It's more of the local regulatory bodies that are really causing for the cost structure there. So it's really good. I want to continue talking to you about this, but I think what I want to do is I want to have you come back and want to talk about the housing that, which you said is a separate podcast. We're going to have you back soon. And literally this later in January, if I could, to talk about that because I think this is one of those topics we've got to address is what can we do to stimulate this area? You have got a unique position there at First American. is there anything that you think we should be sharing with our listeners as we wrap up this podcast, Mark, that you would like to say? [Mark] I just realized it's the Christmas season and I am Ebenezer Scrooge. Right? Like all of this conversation we've just had is like, this is terrible. Right? It's true. We have some challenges in the housing sector, but I think now visited with Christmas future and I'm happy and I'm going to go help cook the turkeys at Christmas dinner. Let's be positive for a moment. I think that the housing market will be better next year than it was this year. And it was barely better than it was in 2023. So we have gone through the worst. It will get better over time. That's point one. And then more broadly, I think really simply, and this is why I love being in the housing market. You can't outsource it and everybody needs it. And those are the long run fundamental underpinnings of why we in the mortgage finance industry have a good job because you can outsource it and everybody needs it. [David] I think you've really brought out some great points on this podcast interview, some things that I think it's first time home buyer. There's going to be a surging opportunity. There are going to be refinances going on. We're probably dealing in this interest rate where we're at right now in the sixes, get used to it, but at least it's stable stability. [Mark] And that's pretty normal by any historical standard is a 6% mortgage. Right. [David] By any normal, exactly. I remember when I started 50 some years ago. mean, we're just thrilled to have the rates where they're at. We should be having that attitude. But then we look at the first time homebuyers, some of the creative programs, and then the first time homebuyer programs for the down payment assistance that could be out there. It's gonna be those that really are gonna do their homework, that are gonna succeed. They're gonna get innovative and get caught up and agree that, and see the opportunities on those rather than just running as the last refinance movement really ruined a lot of mortgage lenders. It became order taking. It's going to happen. You're get out and work for it, but it's there for the getting. So Mark, so good to have you here. I really appreciate you taking time to join us for those that want to follow you. you guys publish a podcast as well. You published regularly. How can we hear more from you in addition to having you back soon? [Mark] Yep, absolutely. Sure. So firstam.com/economics. That's where we host a blog and our podcast there. Of course you can find our podcast. It's called Reconomy. We're very inventive with our names, Reconomy. On any of your podcasting platforms, we put it out every other Thursday, 10, 15 minutes tops. We have a lot of fun. If you like 80s music and dad jokes, then this is the housing podcast for you. [David] I love it. Yes. Yeah. We'll put a link listeners to this podcast. It's something that You need to listen to it is so much information but it's also really fun to listen to. I love it. Really do a great job. [Mark] Thank you, David. This has been awesome. I can't wait to come back on and talk more in the new year. [David] I can't wait. I'm looking forward to having you on. Thank you. [Mark] Thank you.

Important Links

• First American website
• Reconomy podcast
• First American Economics
• LinkedIn - Mark Fleming

Mark Fleming serves as the senior vice president for Decision Science and chief economist for First American Financial Corporation, a leading provider of title insurance, settlement services and risk solutions for real estate transactions that traces its heritage back to 1889. In his role, he leads an economics team responsible for analysis, commentary and forecasting trends in the real estate, mortgage and title insurance markets.

Fleming’s research interests primarily include real estate and urban economics, data science and insurance market structure. He has published research in the American Journal of Agricultural Economics, Journal of Structured Finance and Geographic Information Sciences. He has presented his research at academic association meetings and has also been published in the book, “Advances in Spatial Econometrics.” Fleming is a 6-time (2018-2023) Pulsenomics Home Price Expectations Survey Crystal Ball awardee, has testified before Congress and is the author of six U.S. patents. As a trusted and influential voice with more than 20 years of experience in the mortgage and property information business, Fleming is frequently quoted by national news outlets and industry trade publications such as The Wall Street Journal, The New York Times, Bloomberg News and Housing Wire and he is a frequent guest on high-profile broadcast news channels, including Yahoo Finance, Reuters News, CNBC, Fox Business News and NPR. Fleming regularly contributes commentary and analysis to the First American Econ Center blog and co-hosts a top-rated biweekly podcast, REconomy, that focuses on timely topics in real estate. Before joining First American, he developed insights and analytical products for CoreLogic, and property valuation models at Fannie Mae. Fleming graduated from the University of Maryland with a Master of Science and a doctorate in agricultural and resource economics and holds a Bachelor of Arts in economics from Swarthmore College. He lives and works in the Washington, D.C. area.